Discipline for dishonesty in the workplace
By Tabacks Employment Law Team
It is unsurprising that so much litigation, particularly in the financial sector, has occurred around “dishonesty”. Dishonesty is a blight in any workplace, but where it occurs in financial institutions which, for obvious reasons, require a zero tolerance to dishonesty, any shade of grey becomes an issue. A dishonesty finding against an employee in the financial sector will almost always constitute a summarily dismissible offence. Moreover, it will often lead to debarment in terms of the Financial Advisory and Intermediary Services Act as well as a listing on the Register for Employee Dishonesty System, known as REDs.
In this update, we unpack the offence of dishonesty. We do this by looking at some of the Labour Appeal Court’s (“LAC”) direct pronouncements on the offence of dishonesty, and by looking at what the LAC has held in relation to the importance of an employee’s intention in workplace disciplinary offences. How these two issues are related will become apparent below.
“Dishonesty” as a workplace disciplinary offence
The “greyness” can be traced back some 20 years with the LAC’s judgment in Nedcor Bank Ltd v Frank [2002] 7 BLLR 600 (LAC) (“Nedcor”). In Nedcor, two employees were charged with dishonesty for, in broad terms, manipulating an ATM to make it reflect that it was disengaged as opposed to out of cash. In Nedcor, the LAC stated that “[d]ishonesty entails a lack of integrity or straightforwardness and, in particular, a willingness to steal, cheat, lie or act fraudulently”.
In assessing the two employees’ conduct the LAC went on to state “[c]ertainly, insofar as the appellant or its customers are concerned, no intention to steal, cheat, lie or act fraudulently is manifest. And what of the intention to conceal the true state of affairs from the management of the airport? That is not covered by the charge.”
Employees in the CCMA, Labour Court and even Labour Appeal Court have escaped disciplinary sanction by successfully arguing that while they may have committed some wrongdoing, the employer did not, and could not, prove that they acted with a dishonest intent in line with the Nedcor definition of dishonesty.
In December of 2021, the LAC in Woolworths (Pty) Ltd v CCMA and Others (2022) 43 ILJ 839 (LAC) ("Woolworths”) considered a matter in which an employee was charged with gross misconduct for breaching workplace policies and abusing authorised sick leave when he informed his manager that he was unable to report for work but was then observed watching a rugby match. The punch in this charge was that the employee could have, if this was not picked up, claimed wages to which he was not entitled.
The LAC in Woolworths, despite the employee being charged for gross misconduct, and off the back of inter alia the employee’s concession that it is not “honest that [the employer] must pay [him] for the day and also pay for the part where [he] would be at the rugby”, found that the employee “[m]anifestly … acted dishonestly in absenting himself from work on the basis that he was too ill to perform his duties but then travelled for at least an hour to support his local rugby team, knowing full well that he would be paid for the day.”
In Woolworths, the LAC held that the CCMA commissioner’s finding that there had been no dishonesty was obviously subject to review. The LAC in Woolworths was quite clearly not interested in overly technical and intention-dependant definitions of dishonesty.
In March 2022, the LAC again considered dishonesty in Austin-Day v ABSA Bank Ltd and Others (PR 158/17) (PA02/2020) [2022] ZALAC 6 (“Austin-Day”). In Austin-Day, a bank employee was charged with dishonesty for depositing R100 of her own money into ten inactive accounts, opened by ten different customers, that were under her control at her branch. The employee did this without the customers’ knowledge. The effect of these irregular deposits was that the accounts were recorded as activated accounts in the branch’s books and constituted sales in terms of the branch’s performance.
Of high importance to the LAC in Austin-Day was the fact that the employee, it appears quite proudly, disclosed her conduct to her regional manager. The LAC reverted to a Nedcor definition of dishonesty and found that there was no evidence that the employee acted dishonestly. The LAC reasoned that the employee would not have made the disclosure she did to her regional manager if she had an intention to deceive and that the employee’s alleged contrition indicated that she did not act with an intention to be dishonest. In Austin-Day, the LAC clearly saw a proved intention to be dishonest as a necessary element of a dishonesty finding in the context of workplace discipline.
The LAC’s latest pronouncement on dishonesty was in SASBO and One Other v Standard Bank and Others JA32/2021 (18 May 2022) (“Standard Bank”). In Standard Bank, the employee was charged for dishonesty for falsifying the employer’s records in balancing her till with money that she did not have, in order to show a balanced position. Argument in Standard Bank centred on whether the employer could prove that the employee’s conduct met the Nedcor definition of dishonesty, and particularly whether the employer could prove that the employee had a dishonest intention when she did what she did.
By distinguishing the matter from Nedcor, the LAC in Standard Bank avoided having to directly pronounce on whether the Nedcor definition of dishonesty was still good in law. With reference to, inter alia, the employer’s disciplinary code and without determining whether the employee’s conduct strictly met the Nedcor intention-dependant definition of dishonesty nor embarking on a detailed examination of the employee’s intent, the LAC found that the Labour Court’s finding that the employee was guilty of dishonesty was correct.
The importance of “intention” in workplace disciplinary offences
In the case of Belinda Nel v Construction Education and Training Authority (CETA) and Others (PA3/17) [2018] ZALAC 16 CETA (“Belinda Nel”) the employee faced a charge of inter alia fraud and dishonesty. In this case the LAC stated that in misconduct hearings one is not required to satisfy the criminal law requirements of any wrongdoing. The LAC then stated that all that is required in a misconduct hearing is to establish whether the employee committed misconduct, whether that misconduct was one of dishonest conduct complained of or something else, and the seriousness thereof. The LAC made it clear that it was not particularly concerned with strict definitional approaches to drafting disciplinary charges. The focus should rather be on the employee’s conduct.
In the case of Malapalane v Glencore Operations South Africa (2018) 39 ILJ 2467 (LAC) (“Malapalane”) the employee was charged with misrepresenting information regarding the grade of coal which resulted in loss of revenue and reputational damage to the employer. The CCMA commissioner found that misrepresentation ought to have an element of intention to deceive. On appeal, however, the LAC found that the intention of the employee was irrelevant, and that the commissioner committed a reviewable irregularity by misconceiving the nature of the enquiry he was enjoined to undertake because he overlooked that the matter was a disciplinary complaint and not a criminal offence.
Discussion
Understandably, many employers and practitioners have likely been left asking themselves what exactly they must be able to prove to sustain a dishonesty finding and whether, and if so how strictly, the Nedcor definition of dishonesty is still applicable.
Owing to an unforgiving chronology of judgments relating to dishonesty, the LAC’s judgment in Standard Bank did not refer to its judgment in Austin-Day or Woolworths; its judgment in Austin-Day did not refer to its judgment in Woolworths and its judgment in Woolworths did not refer to its judgment in Nedcor.
As such, even without bringing the LAC’s jurisprudence concerning the relevance of an employee’s intention into the fray, the LAC’s pronouncements on dishonesty have left the terrain somewhat opaque.
Considering what the LAC found in Woolworths, Standard Bank, Belinda Nel and Malapalane, there is a strong argument, despite the Nedcor definition of dishonesty and the LAC’s judgment in Austin-Day, that it is not necessary for an employer to prove an employee’s intention when dealing with a complaint of dishonesty.
As a general rule, an employee’s subjective state of mind, whether in the context of intention or motive, should be irrelevant in determining whether an employee has misconducted themselves. Disciplinary hearings are not criminal trials. Requiring employers to prove an employee’s intention will lead to disciplinary hearings descending into arguments around whether an employer must prove an employee’s intention, in any case, to the level of dolus directus, dolus indirectus and/or dolus eventualis. This would be absurd, contrary to how the LRA envisages workplace discipline to be handled, and lawyers, inevitably, would be the only winners.
In our view at least, and on a total evaluation of the case law, employers considering instituting a charge of dishonesty against an employee should concern themselves less with trying to determine whether they will be able to prove that the employee had an intention to be dishonest and more with determining whether, on the totality of the evidence, it can be said that the employee misconducted themselves and in a dishonest manner. The latter is the question that should inevitably have to be asked and answered.